The "capital lite" model of creating the next Google obviously isn't working.
The VCs need to get burned at a few more of these Farcebooks before they realize dotcoms are a scam and that you need to actually build and ship something tangible, that people need, that makes business sense, in order to generate money. Shipping a real product creates revenue, not clicks. Revenue creates valuation, not hype and Farcebook is going to be the posterchild for this, IMO.
Google was an exception, not an example, of click-based revenue, and this is where many VCs have cranio-anal transposition. Groupon? Gimme a break.
There are only so many times you touch a hot stove before you stop doing it.

Good point @elPresidente...I regret this focus on ads and clicks myself...but I think Google and Facebook understand that...Google has started building the hardware, some very innovative like Google glasses, Microsoft is getting its surface out, Oracle wants to have the best processor in the world, and Facebook will be eventually be selling cell phones...so this is not as bad as you say...the strategy is to get in at the software level, and when you get successful, start building hardware to support it...and yes, I hate Groupon deals but my daughter uses it all the time saving 70-80% of her money on her purchases...Kris

I prefer to look at Google and facebook as one of the TV broadcasters. They provide a channel for people to connect. They may certain contents. Or they can buy contents from production company. What's better that Google and Facebook do is "Crowdsourcing". People voluntarily provide content for them and share them with their group of friends. The net will continue evolve. Who knows! Facebook may become valuable company in the near future.

Health care tech startups might be more attractive were their return windows tighter. The device-approval process is slow, to be sure. It shouldn't be tossed overboard of course, because there are safety issues that need to be considered, but more of alignment between regulatory approval and the pace of technological change would be helpfu.

In conjunction with unveiling of EE Times’ Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. One of Silicon Valley's great contributions to the world has been the demonstration of how the application of entrepreneurship and venture capital to electronics and semiconductor hardware can create wealth with developments in semiconductors, displays, design automation, MEMS and across the breadth of hardware developments. But in recent years concerns have been raised that traditional venture capital has turned its back on hardware-related startups in favor of software and Internet applications and services. Panelists from incubators join Peter Clarke in debate.